A Veblen good is a type of luxury good for which demand rises as its price rises, contradicting the ordinary law of demand and producing an upward sloping demand curve. Named for the American economist Thorstein Veblen, these goods become desirable precisely because of their high price rather than despite it, since the higher price functions as a status symbol within what Veblen called conspicuous consumption. A product can become a Veblen good by being a positional good, something only a few people can own; luxury cars such as the Rolls-Royce Phantom are commonly cited as examples, desired because of their high price rather than in spite of it. Economists treat the behavior as an anomaly, since it runs against the standard microeconomic assumption that consumers buy less of a good as its price rises. This description is adapted from Wikipedia contributors under CC BY-SA 4.0; changes were made. https://creativecommons.org/licenses/by-sa/4.0/
Facts
FieldMicroeconomics and consumer theory (conspicuous consumption) 1 Proposed ByNamed after American economist Thorstein Veblen, who described the contradiction 1 SignificanceHigher prices can make a good desirable as a status symbol through conspicuous consumption and conspicuous leisure, especially for positional goods few others can own. 1 Classification
Concept Form Connections
Associated With
Giffen Good, Concepts Both are standard textbook exceptions to the law of demand, where quantity demanded rises as price rises, though for different reasons: an income effect for a Giffen good, status signaling for a Veblen good.
Source Wikipedia
Additional Source Giffen good (Wikipedia)
Associated With School
Source Thorstein Veblen (Wikipedia)
Attributed To
Veblen's Theory of the Leisure Class (1899) introduced conspicuous consumption, the behavioral basis for Veblen goods.
Source Wikipedia
Additional Source Veblen good (Wikipedia)
Sources
1. Veblen good (Wikipedia)
Lead section
They are named after American economist Thorstein Veblen who described the contradiction.
Background section
Veblen first identified conspicuous consumption as a mode of status-seeking (i.e., keeping up with the Joneses) in The Theory of the Leisure Class (1899).
Lead section, second paragraph
The higher prices of Veblen goods may make them desirable as a status symbol in the practices of conspicuous consumption and conspicuous leisure.
lead paragraph, sentence beginning: A Veblen good is a type of luxury good for which the demand
A Veblen good is a type of luxury good for which the demand increases as the price increases, in apparent contradiction of the law of demand, resulting in an upward-sloping demand curve.
- Attributed To: Thorstein Veblen
View the SourceThorstein Veblen (Wikipedia)
Associated With School: Institutional Economics, https://en.wikipedia.org/wiki/Thorstein_VeblenQuote, Associated With School: Institutional Economics, https://en.wikipedia.org/wiki/Thorstein_Veblen
Veblen laid the foundation for the perspective of institutional economics.
Giffen good (Wikipedia)
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